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Wednesday, December 19, 2007

Today President Bush signed the federal energy bill. The bill contained several provisions aimed at cutting greenhouse gas emissions, such as subsidies for ethanol, efficiency standards for federal buildings, and the replacement of incandescent bulbs with compact fluorescent and LED bulbs. One of the highlights was a long-overdue increase in fuel efficiency standards.

The bill's centerpiece is the boost in the minimum fuel-efficiency standard for passenger vehicles, the first to be passed by Congress since 1975. It requires new auto fleets to average 35 miles a gallon by 2020, a 40 percent increase from today's 25-mile average. By 2020, the measure could reduce U.S. oil use by 1.1 million barrels a day, more than half the oil exported by Kuwait or Venezuela and equivalent of taking 28 million of today's vehicles off the road.

Overall, this bill seems like a mixed bag. Better energy efficiency for buildings and home appliances represents a clear step forward. Whether corn-based ethanol improves on gasoline is questionable, given its lower energy output, impact on food prices, and contribution to watershed pollution. Ethanol based on other sources is still not on the market. The bill could have been better had Bush not blocked several provisions, particularly one that would have cut subsidies for the fossil fuel industry and provided them for wind and solar energy production instead.

While the mileage standards improve on the current situation, they also seem somewhat timid. Gasoline produces about 8.87 kg of carbon dioxide per gallon. If my conversion calculations are correct, a 35 mpg standard would work out to 157 g/km of carbon dioxide emissions. So in 13 years, the bill would bring American cars to be more or less on par with current European standards.

The European Commission today proposed new legislation to reduce the average C02 emissions of new cars by nearly 20% to 120g per kilometre by 2012.

The proposal will make car manufacturers legally responsible for reducing the average emissions of their fleet from around 160g/km to 130g/km (18.75%) by 2012 through improved technology to improve fuel consumption. The other 10g of savings will come from other technological improvements such as better tyres and more efficient air conditioning systems.

Cars account for 12% of the European Union's carbon emissions. The EU environment commissioner, Stavros Dimas, said the aim of the legislation was to reduce C02 emissions from cars in order to "help fight climate change".

What is notable here is not only how deep the proposed cuts would be, but also the speed with which they would be implemented. The legislation would impose fairly stiff penalties on manufacturers for emissions above the threshold, starting in 2012 and rising 3 years later. The U.S. would do well to emulate the European model if American cars are to remain competitive as gas prices rise.